Advocate plans $247 million renovation of Good Shepherd

The largest hospital network in Illinois, which has already pledged to invest $200 million as part of its proposed acquisition of Sherman Health Systems, plans a $247 million renovation of the 169-bed Advocate Good Shepherd Hospital about 15 miles away.

The Oak Brook-based health care system has 11 hospitals statewide, including Advocate Lutheran General in Park Ridge and Advocate Condell Medical Center in Libertyville.

With $4.60 billion in revenue in 2012, Advocate is taking aim at increasing its presence in the competitive northwest suburban hospital market.

“If you take a look at the map, they already had a pretty good presence,” said James Unland, president of Chicago-based consulting firm Health Capital Group. “I absolutely think they're going for more and more market share, and they have the resources to do it.”

Acquiring Sherman and renovating Good Shepherd should help Advocate expand its physicians group, which has 1,000 doctors, Mr. Unland said.

“They'll have a lot of influence over the independent doctors to bring them into the fold,” he said.

Centegra Health System, which has a 176-bed hospital in McHenry and is building a $230 million hospital in Huntley, says Advocate's plans are “concerning,” according to a statement from a Centegra spokeswoman. Both locations are about 13 miles from Good Shepherd.

“Between these two projects, the Sherman acquisition and Advocate Good Shepherd renovation, Advocate will spend more than $440 million at a time when health care resources are precious, and their projects propose no new services,” she said in a statement.

The Good Shepherd plan would convert the Barrington hospital to all private rooms, almost double the size of the intensive-care unit, add four operating rooms and expand the presurgical and postoperative areas, according to an application submitted last week to the Illinois Health Facilities and Services Review Board. The board regulates health care construction projects to avoid duplication of services and must approve Advocate's proposal for it to take effect.

Most of the original hospital has not been modernized since it was built three decades ago, the application says.

Planning for the renovation project began more than four years ago and is not part of a larger Advocate strategy to gain market share in the northwest suburbs, said Karen Lambert, the hospital's president.

'ALL ABOUT SERVING NEEDS'

“This is all about serving the needs of our community and renovating a facility that is 35 years old,” she said. “We think we compete by offering quality, safe care, and this project is going to make sure we can offer that.”

Good Shepherd also is roughly 13 miles from St. Alexius Medical Center in Hoffman Estates. Presence St. Joseph in Elgin is a key competitor with Sherman, but just 22 miles away from Good Shepherd.

Even so, the Good Shepherd project will not take away patients from other nearby hospitals, an Advocate spokeswoman insists.

After the project is completed, the number of beds at Good Shepherd will increase by only seven. While the size of some departments will be reduced, the intensive-care unit will be expanded to 32 beds, from 18. In 2011, Good Shepherd had the second-highest ICU occupancy in the state among hospitals with more than 10 intensive-care beds.

“As more patients shift to outpatient care, the mix of remaining inpatients becomes more complex, requiring additional intensive care beds,” the application says. “The lack of available ICU beds not only adversely affects the patients needing the optimal level of care, but also serves as an unnecessary bottleneck for surgery, (the) emergency department and other areas.”

Despite its ample resources, Advocate has seemingly been cautious on major capital spending projects. Six months ago, the health care network scaled back plans to expand Advocate Christ Medical Center in south suburban Oak Lawn. At the time, hospital executives attributed the change to the new federal health care law's greater emphasis on outpatient care.